The article seems to insinuate that everything on the iPad runs under an ARM emulator. It would make more sense that OS version 3.2 running on the iPad is already compiled for the A4 (hence the astonishing speed), and only iPhone-native apps were emulated.
But you're right, it does seem a little crackpot. Couldn't someone decompile an iPad executable and see if it's ARM code or not?